US: Newspapers forced to ease national ad rates?

Posted by Jean Yves Chainon on February 21, 2007 at 3:09 PM

With newspaper circulations on the decline, national advertisers are complaining about high national ad rates, which usually carry a premium of up to 30% more than the rates for local advertisers. In their current position, newspapers are often negotiating with these advertisers and conceding lesser premiums.

"National buyers are really circulation-sensitive. Advertisers’ perception is that newspapers are just not reaching the audience they used to and that means the only way they can appeal to national advertisers is by offering discounted prices," said Tim Rodriguez, vice president and director of corporate media service for the Newspaper Services of America.

Therefore more and more national advertisers are seeking, and obtaining, discount prices from newspapers that were once the only broad and effective advertising platform.

"The national premium has long been an issue for newspapers' advertisers, but individual negotiations can mitigate the actual premium. The resultant premium usually isn't the difference that is published in the retail and national rate cards," said Len Kubas, president of Toronto-based Kubas Consultants.

According to MediaLife, the open rate for local auto dealers for display advertising is just $350 per column inch for the daily Washington Post. A Detroit auto dealer might be charged up to $507 – 31% more.

For the Dallas Morning News, the difference can skyrocket even more, between $367 for a local department store versus $904 for a national advertiser – for the exact same ad space.

In the past, there were several rationales to explain these ad rate differences, such as differences in circulation impact and target reach, national premiums serving as discounts to attract small advertisers, or premiums to cover national ad agency fees of up to 15%, and more.

Now, with lesser leverage, newspapers must concede to grousing national advertisers.

"Newspaper advertising prices are increasingly being determined by negotiations between the newspaper and agency or advertiser,” said Kubas.

"You have to be careful how you increase your ad rates. You don't want to be the paper that went down 8 percent in circulation and raised your rates by 7 percent," said Jouette Travis, executive vice president and managing director for Carat.